I am Forbes' Opinion Editor. I am a Senior Fellow at the Manhattan Institute for Policy Research, and the author of How Medicaid Fails the Poor (Encounter, 2013). In 2012, I served as a health care policy advisor to Mitt Romney. To contact me, click here. To receive a weekly e-mail digest of articles from The Apothecary, sign up here, or you can subscribe to The Apothecary’s RSS feed or my Twitter feed. In addition to my Forbes blog, I write on health care, fiscal matters, finance, and other policy issues for National Review. My work has also appeared in National Affairs, USA Today, The Atlantic, and other publications. I've appeared on television, including on MSNBC, CNBC, HBO, Fox News, and Fox Business. For an archive of my writing prior to February 2011, please visit avikroy.org. Professionally, I'm the founder of Roy Healthcare Research, an investment and policy research firm. In this role, I serve as a paid advisor to health care investors and industry stakeholders. Previously, I worked as an analyst and portfolio manager at J.P. Morgan, Bain Capital, and other firms.

How a GOP Senator Helped CLASS, Obamacare's "Fiscal Disaster," Make It into Law

Last week, I wrote about the scandal that is CLASS, Obamacare’s new entitlement for long-term care for the elderly. It turns out that Administration officials, and congressional Democrats, knew all along that the program would be a “fiscal disaster,” and inserted it into the broader health-care bill because of its illusory, near-term deficit-reducing effects.

However, there were plenty of centrist Democrats who voiced concerns about CLASS while the legislation was being drafted. So the question remains: how did CLASS make it into Obamacare? Sarah Kliff, who has been doing some terrific work writing about health care for Ezra Klein’s Washington Post blog, points us to an interesting book by John McDonough, who served as a staffer on Ted Kennedy’s Senate Committee on Health, Education, Labor and Pensions (HELP). According to McDonough, it was Republican Senator Judd Gregg (N.H.) who played the pivotal role in getting CLASS through the HELP Committee.

Gregg, up until his retirement in 2010, was arguably the Republicans’ thought leader in the Senate on fiscal issues. Concerned about the potential unsustainability of the CLASS program, Gregg proposed an amendment to CLASS, in which the bill’s original $65 premium for CLASS would be scotched, instead allowing the Secretary of Health and Human Services to determine the premium.

Sen. Chris Dodd (D., Conn.), who was chairing the committee in Kennedy’s absence, asked Gregg: “Well, am I to understand my colleague then, that if we were—let’s say for the purpose of discussion here, [if we support your amendement,] that my colleague from New Hampshire would then support this plan?” Gregg replied: “Yeah, that’s what I do here…If you’ll accept my amendment, I’ll support the language.”

When Gregg moved his amendment to delete an explicit premium and replace it with an actuarially sound premium to be determined by the HHS secretary, Dodd peered at [Kennedy staffer Connie] Garner for her call: “How about accepting it?” he asked in a whispered conversation. They decided on the spot to agree, surprising and disarming Gregg, and infuriating some Republican staffers who saw the move coming even before Dodd and Garner made the call. CLASS survived; arguably and ironically, Gregg’s amendment did more to secure that survival than anything else in the lengthy process.

Gregg replied to Dodd’s gambit with fulsome praise for CLASS: “Thank you Mr. Chairman, and I appreciate your willingness to be flexible…But I want to second your comments on the concept. I mean, it’s a voluntary program. If it is solvently structured, it could have a very positive impact…And to get people to buy long-term insurance is really helpful.”

Gregg’s support wasn’t just crucial to getting CLASS through the Senate. Indeed, CLASS was critical in helping Democrats gain the support of a broad range of interest groups for the broader bill. As McDonough writes,

[CLASS drew] endorsements from more than 260 disability, elderly, health, labor, and religious organizations, including AARP, Easter Seals, Paralyzed Veterans of America, the Special Olympics, the Alzheimer’s Association, and many more. For a number of these organizations, CLASS was their principal motivation to support national health reform, and to them, health reform that did not address the need for long-term services and supports for persons with disabilities was not worthy of the name health reform. There were also opponents—most prominently from the life insurance industry, especially two companies with large footprints in the long-term care insurance market, Genworth and John Hancock, as well as their trade organization, the American Council of Life Insurers. Health insurers did not see CLASS as competition and did not engage.

It’s a classic example of how legislation gets written in Washington: a confluence of interest-group advocacy and on-the-spot procedural hijinks. By the time CLASS’ bill to taxpayers comes due, however, most of the senators who supported it will be long gone.

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